In the Context of Small Businesses, Which of the Following

question 2

Multiple Choice

In the context of small businesses, which of the following is true of preferred stock?

• A) It usually conveys no voting rights to its holder.
• B) Preferred stock dividends must be paid after common stock dividends.
• C) It represents the owners' interest.
• D) It usually consists of many identical shares.

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Definitions:

Unsecured Creditors

Creditors who have extended credit without the protection of collateral, making their claims on a debtor’s assets secondary to those of secured creditors.

Collateral

Property or assets pledged by a borrower to secure a loan or other credit, and subject to seizure on default.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a debt.

Financing Statement

A document filed by a creditor to indicate a security interest in the assets of a debtor, typically used in secured transactions.